Sales and Use Tax TAA 17A-017 Memberships
August 30, 2017
XXXXXXXXX
XXXXXXXXX
XXXXXXXXX
XXXXXXXXX
XXXXXXXXX
Re: Technical Assistance Advisement 17A-017
Sales and Use Tax
XXXXXXXXXX (“Company”)
FEI #: XXXXXXXXX
Section 212.05, 212.02 and 212.04, Florida Statutes (F.S.)
Rule 12A-1.045, Florida Administrative Code (F.A.C.)
Dear XXXXXXXX:
This response is in reply to your letter to the Department, dated May
23, 2017, in which you are requesting the Department's issuance of
a Technical Assistance Advisement ("TAA") pursuant to s. 213.22,
F.S., and Chapter 12-11, F.A.C., concerning the taxability of XXXXXXXXX
Memberships. An examination of your petition has established that you
have complied with the statutory and regulatory requirements for issuance
of a TAA. Therefore, the Department is hereby granting your request for
issuance of a TAA.
REQUESTED RULING
Whether charges for XXXXXXXXX Memberships, and free, one-month trial memberships,
are subject to Florida sales tax.
FACTS
As stated in your request for advisement:
Company offers a membership program known as XXXXXXXXX XXXX-XX (“XXXXXXXX”
or “XXXXXX XXXXXX XXXXXX”). The membership program is available
to existing XXXXXXX XXXXXX members for an additional membership fee.
XXXXXXXXX allows members to shop for groceries, everyday essentials, favorites
from local shops and restaurants on XXXXXXX (the “Website”)
in select cities. Customers may sign up for a free month trial membership
and thereafter a paid monthly membership. Participants in the XXXXXXXXX
membership program are referred to as “XXXXXX XXXXXX XXXXXX Members”
or “XXXXXXXX Members.” In order to be an XXXXXXXX member,
a customer is also required to have an XXXXXX XXXXX (separate membership
available for $10.99 a month or $99 annually and agree to the XXXXX XXXXX
Terms & Conditions to activate their XXXXXXXX membership.) [As noted
in footnote 1 of your request, the XXXXX membership program does not offer
access to communications services.] While an XXXXX XXXXXX Membership is
a prerequisite to purchasing XXXXXXX, a participant in XXXXX XXXXX may
decide to purchase XXXXXXX at anytime during their XXXXX XXXXX Membership.
Further, the fees for the XXXXX XXXXX and XXXXXXXXX memberships are separately
stated on each participant’s bill. The current benefits of XXXXXXXXXX include:
Delivery – XXXXXXX Members are entitled to receive same day or next
day scheduled delivery. Free delivery is available on XXXXXX orders over
$40, as well as other discounted shipping benefits on eligible XXXXXXX
purchases made on the Website. Products eligible for these shipping benefits
are designated as XXXXXXX on the Website’s products pages.
XXXXX XXXXX Items – XXXXXXXX Members receive access to the XXXXXXXX
groceries, everyday essentials, and selections from neighborhood shops
and restaurants. Examples include fresh produce, meats, dairy, frozen
items, and household essentials such as soap and detergents. Customers
that are not XXXXXXXX Members may purchase other items (other than perishable
items) on the Website for a regular Prime shipping charge. While the XXXXXXX
catalog is “exclusive” to XXXXXXX Members, many of the items
available in the catalog are not exclusive.
XXXXX XXXXX Deals – XXXXXXXX Members receive discounts on certain
items of tangible personal property. For example, XXXXXXX Members can
purchase certain fruits and vegetables at a discount. The suite of products
offered to XXXXXXXXX Members at a discount continues to change based on
availability.
You have attached as Exhibit A, three Technical Assistance Advisements
regarding the applicability of sales tax on Taxpayer’s various membership
programs, including XXXXXXXX. In the XXXXXX ruling, the Department concluded
that none of the XXXXXX Membership services qualified as services subject
to sales and use tax. You state that based on the rationale for concluding
that the XXXXXXX XXXXX Membership is not subject to Florida sales and
use tax, the XXXXXXXX Membership should not be taxable. Similar to the
XXXXXXXX Membership, the primary XXXXXX benefit is to obtain prepaid shipping.
Like the XXXXXXXX membership, the shipping benefits included in the XXXXXXX
Membership are F.O.B. origin and are separately stated, even if the shipping
charge is $0.00.
LAW AND DISCUSSION
Chapter 212, F.S., imposes a sales tax on the sale and use of tangible
personal property and some services in the state of Florida. Sections
212.04 and 212.05, F.S., specifically impose a tax collection obligation
on persons engaged in the business of making sales of tangible personal
property and specified services, including the sale of admissions. As
defined in s. 212.02(1), F.S.:
The term “admissions” means and includes the net sum of money
after deduction of any federal taxes for admitting a person or vehicle
or persons to any place of amusement, sport, or recreation or for the
privilege of entering or staying in any place of amusement, sport, or
recreation, including, but not limited to, theaters, outdoor theaters,
shows, exhibitions, games, races, or any place where charge is made by
way of sale of tickets, gate charges, seat charges, box charges, season
pass charges, cover charges, greens fees, participation fees, entrance
fees, or other fees or receipts of anything of value measured on an admission
or entrance or length of stay or seat box accommodations in any place
where there is any exhibition, amusement, sport, or recreation, and all
dues and fees paid to private clubs and membership clubs providing recreational
or physical fitness facilities, including, but not limited to, golf, tennis,
swimming, yachting, boating, athletic, exercise, and fitness facilities,
except physical fitness facilities owned or operated by any hospital licensed
under chapter 395.
The tax on admissions is specifically applicable to membership benefits
to “a place of amusement, sport, or recreation” or “recreational
or physical fitness facilities,” which the XXXXXXX Membership does
not provide. As previously noted, the only services provided with the
XXXXXXX Membership are: (1) same day or next day delivery; (2) free delivery
on orders of $40 or more; (3) access to XXXXXXXX products (perishable
groceries) not available to XXXXXX XXXXX members; and, (4) discounts on
certain products.
Transportation charges incurred without the sale of tangible personal
property in Florida are not subject to sales tax. Transportation charges
that are included with the sale of tangible personal property may be subject
to tax. See Rule 12A-1.045, F.A.C.
CONCLUSION
As none of the individual services included in an XXXXXX Membership are
subject to Florida sales and use tax, neither the sale of the XXXXXXX
Membership nor the one-month free trial membership are subject to Florida
sales and use tax.
This response constitutes a Technical Assistance Advisement under s. 213.22,
F.S. which is binding on the department only under facts and circumstances
described in the request for this advice, as specified in s. 213.22, F.S.
Our response is predicated on those facts and the specific situation summarized
above. You are advised that subsequent statutory or administrative rule
changes or judicial interpretations of the statutes or rules upon which
this advice is based may subject similar future transactions to a different
treatment than expressed in this response.
You are further advised that this response, your request and related backup
documents are public records under Chapter 119, F.S., and are subject
to disclosure to the public under the conditions of s. 213.22, F.S. Confidential
information must be deleted before public disclosure. In an effort to
protect confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement, the backup
material and this response, deleting names, addresses and any other details
which might lead to identification of the taxpayer. Your response should
be received by the Department within 15 days of the date of this letter.
If you have any further questions with regard to this matter and wish
to discuss them, you may contact me directly at (850) 717-7202.
Sincerely,
Richard R. Parsons
Tax Law Specialist
Technical Assistance & Dispute Resolution
(850) 717-7202
Record ID: 213480